Neal A. Holland Jr., the owner of a construction materials business in Decatur, Alabama, has been a director on the board of Tupelo, Mississippi-based Renasant Corp. since 2005, when Heritage Financial Holding Corp. was purchased by Renasant. Although he’s a longstanding board member, he takes seriously his responsibility to provide leadership as the chairman of the $8.8 billion asset bank’s nominating and corporate governance committee. A few years ago, the board started peer reviews as part of director performance evaluations, and it looks to find directors who fit not just where the bank is now, but where it’s going strategically. He spoke to Bank Director Editor Naomi Snyder.
Q: Who serves on your nominating committee, and how often does it meet?
NH: We meet quarterly and as needed. It has six members on it. All are independent. There are no members of management on the committee.
Q: What are the responsibilities of your nominating committee?
NH: The committee has two chief responsibilities: overseeing the process of nominating individuals to serve on Renasant’s board, and secondly, ensuring that Renasant’s corporate governance structure, policies and procedures comply with applicable laws, regulations and stock market requirements, reflect the best practices of financial institutions, and are tailored to Renasant’s missions and values.
The committee’s job is to determine what kind of board is appropriate for a company of our size. We look at the number of directors, director tenure, and with that, getting the appropriate mix of long-serving and new directors, and we also look at the required skill set for the board, on an individual basis and collectively. We’d like to have more technology experience. That’s an area where we have an opportunity to grow.
Q: Do you evaluate your board’s performance and needs?
NH: We do a board assessment every year. Then, every time a board member is up for nomination, which is every three years, they go through a peer evaluation and self-assessment. We started this a couple of years ago. It’s really tough to evaluate your friends. You have to be honest and truthful. It’s not easy. But it has been a positive experience.
Q: In what way?
NH: It helps us test each other. On director tenure, there might be a concern that a long-tenured director is too comfortable with management and not providing independent advice. On the other hand, the long-tenured director, you would expect expect [to provide] better advice. We have to weigh those viewpoints and pick the right approach. We use the peer review process to ensure that long-tenured directors are independent.
Q: Has it led to anyone leaving the board?
NH: Not at this point. It has actually strengthened our board.
Q: How do you handle succession planning?
NH: We have just gone through a succession. Starting in 2014, our CEO and Chairman Robin McGraw told the full board he would step down as CEO in 2018. We retained an outside consultant, and he helped our committee decide if there were any viable candidates internally. There was one who stood above the rest, and that was Mitch Waycaster. The committee and the board unanimously agreed on that.
We review succession planning for the entire management team twice per year, in January and July, and the nominating committee and compensation committee both review that. We look at the top of the house with the dotted line [directly reporting to] the CEO and review reports for several levels below that.
We take a proactive approach to succession planning at the board level as well, not just for where our bank is now, but where our strategic plan sees us being in the future.
Q: How did the bank’s governance have to change after the recent acquisition of Metropolitan Bank put you over the $10 billion asset mark?
NH: This has been a company-wide effort. We didn’t wait until we went over the $10 billion mark. We started planning for this three years ago, when we exceeded $5 billion in assets. Since then, the bank has made significant changes to infrastructure. We did it because we believed it was prudent, not just because we had to. Among changes, we enhanced our information technology infrastructure and personnel. We hired a chief information officer. We developed and implemented [the stress testing required] under the Dodd-Frank Act. We monitor the risk management program, which includes a board-level risk committee that we established in 2011. We have positioned ourselves well with the regulatory burden of crossing that mark.
Q: What advice do you have for other nominating committees?
NH: I would take the board assessment process seriously. It’s human nature to want to avoid being hard on one of your colleagues, but honestly and directly addressing the board’s and each individual’s performance is essential for a high functioning board. Director education, the seminars I’ve attended, have helped me tremendously. They can address any weaknesses that are identified in the assessment process. As a final piece, use outside counsel and other advisors. Don’t try to do it all yourself. Most directors are busy. Keeping abreast of all the issues is a real challenge. You need outside advisors.